Dean Foods completes spinoff of Broomfield's WhiteWave Foods

WhiteWave Foods -- the Broomfield-based maker of Horizon Organic and Silk Soymilk -- is once again a standalone company.

WhiteWave on Thursday completed its previously announced spinoff from Dean Foods Co., the Dallas-based dairy giant that had acquired the locally rooted firm more than 10 years ago.

After the stock distribution made at the close of business Thursday, Dean Foods now owns a 19.9 percent stake in WhiteWave (NYSE: WWAV, $17.82). Dean Foods plans to dispose of those holdings -- through debt-for-equity exchanges or other tax-free dispositions -- within the coming 18 months, officials said.

The spinoff comes roughly seven months after WhiteWave debuted on Wall Street with a $391 million initial public offering.

Blaine McPeak, president of WhiteWave Foods, said the newly independent status would allow for greater flexibility for future product development and sales and operational growth.

"(Dean Foods and WhiteWave) had fundamentally different business strategies; we had different operating structures," he said.

The best opportunity to create value for the shareholders, he added, is if there are two separate entities.

McPeak expressed optimism about the potential for top-line growth from its existing brand categories -- plant-based beverages, organic milk and creamers -- and from newly entered segments that include non-dairy yogurt and iced coffee beverages.

WhiteWave Foods in 2012 posted $2.3 billion in revenue.

One of the biggest near-term challenges consists of supply chain pressures, McPeak said.

"We continue to be very aggressive in investing in both capital and people resources and continue to expand our manufacturing and our warehousing," he said.

'Innovation capabilities'

In a recent research note, analysts for Morgan Stanley highlighted WhiteWave's expense and capacity issues as potential stock catalysts. The firm maintained its equal-weight rating on WhiteWave's stock.

"We expect (WhiteWave) to leverage its innovation capabilities in new directions (soy yogurt, low-cal variants, new flavors), as well as ultimately consider bolt-on (mergers and acquisitions), given its history of successful transactions," analysts wrote in the May 11 report.

As a result of the spinoff, WhiteWave's 600-person North American headquarters will remain in Broomfield and its European headquarters will remain in Belgium. By June or July, the company will establish a small office in the Denver area to serve as its corporate headquarters, McPeak said.

"(The establishment of a Denver office) really allows this company to continue to operate in the fashion it had for the past many years," he said.

Remaining a Colorado-based firm and retaining its presence in the Boulder and Broomfield region were important elements for the newly independent firm.

"For the people who are here in Colorado, it's probably -- for some way, shape or form -- an even more meaningful thing," McPeak said. " ... Being our own separate, independent company with the roots that we have here is really, really neat."

White Wave trudged through its early years as it tried to secure money and distribution resources to further grow its reach. After enduring one bankruptcy, White Wave was on the verge of a second before one product came along and revolutionized the Boulder-based business and the industry.

Silk soy milk was launched in 1996.

Packaged in milk cartons and sold in the refrigerated dairy section, Silk helped vault White Wave's revenues from $8 million in 1996 to more than $135 million in five years' time.

'Potent and powerful'

White Wave gained the attention of Dean Foods, which acquired a minority interest in the Boulder firm in 1999.

By the early 2000s, Silk had penetrated 94 percent of supermarkets nationwide and, by 2002, Dean Foods paid $189 million for the remaining 64 percent equity interest in White Wave.

A year later, Dean Foods upped its stake in the natural products industry when it paid $216 million and assumed $40 million in debt for Longmont-based Horizon Organic.

Dean Foods later would consolidate Silk, Horizon and other brands such as Land O Lakes into WhiteWave Foods.

Demos, when reached by the Daily Camera on Thursday, said the IPO and spinoff will allow WhiteWave to carve out its own destiny without being in the shadow of a parent company. Separating the "value-creation business" from the "commodity business" is a sound move, he said via email.

"Now that (WhiteWave) is public there is one more potent and powerful natural foods player on the main financial/performance stage," Demos wrote. "Considering that organic foods (and soy in particular) were the target of many jokes years ago, this is a big signal that the mainstream has embraced these lifestyle choices in a very serious way."

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